I'm just going to assume familiarity with the Singularity. Introductions are fun, but thats not this.
Ander's summarizes some of the discussion about the two somewhat competing routes towards the Singularity and AI development, namely WBE (whole brain emulation), or AGI (artificial general intelligence). The WBE researchers such as Anders are focused on reverse engineering the human brain, resulting in biologically accurate simulations which lead to full brain simulations and eventually actual emulation of particular brains, or uploading. The AGI people are focused more on building an artificial intelligence through whatever means possible, using whatever algorithms happen to work. In gross simplification, the scenarios envisioned by each camp are potentially very different, with the WBE scenario usually resulting in humans transitioning into an immortal afterlife, and the AGI route more often leading to something closer to skynet.
Even though the outcomes of the two paths are different, the brain reverse engineering and hum level AI approaches will probably co-develop. The human neocortex and the cortical column learning algorithm in particular seem to be an extremely efficient solution to general intelligence, and directly emulating it is a very viable route to AI. AGI is probably easier and could happen first, given that it can use structural simulations from WBE research on the long path towards a full brain emulation. Furthermore, both AGI and WBE require immense computing, but WBE probably requires more, and WBE also requires massive advancements in scanning technology, and perhaps even nanotechnology, which are considerably less advanced.
All that being said, WBE uploading could still reach the goal first, because complete WBE will recreate the intelligences of those scanned - they will be continuations of the same minds, and so will immediately have all of the skills, knowledge, memories and connections of a lifetime of experience. AGI's on the other hand will start as raw untrained minds, and will have to go through the lengthy learning process from infant to adult. This takes decades of subjective learning time for humans, and this will hold true for AGI as well. AI's will not suddenly 'wake up' or develop conscious intelligence spontaneously.
Even though a generally accepted theoretical framework for intelligence still seems a ways off, we do certainly know it takes a long training time, the end accumulation of a vast amount of computational learning, to achieve useful intelligence. For a general intelligence, the type we would consider conscious and human-like, the learning agent must be embedded in an environment in which it can learn pattern associations through both sensory input and effector output. It must have virtual eyes and hands, so to speak, in some fashion. And knowledge is accumulated slowly over years of environmental interaction.
But could the learning process be dramatically sped up for an AGI? The development of the first initial stages of the front input stage of the human cortex, the visual cortex, takes years to develop alone, and later stages of knowledge processing develop incrementally in layers built on the output processing of earlier trained layers. Higher level neural patterns form as meta-systems of simpler patterns, from simple edges to basic shapes to visual objects all the way up to the complete conceptual objects such as 'dog' or 'ball' and then onward to ever more complex and abstract concepts such as 'quantum mechanics'. The words are merely symbols which code for complex neural associations in the brain, and are in fact completely unique to each brain. No individual brain's concept of a complex symbol such as 'quantum mechanics' is precisely the same. The hierarchical layered web of associations that forms our knowledge has a base foundation built out of simpler spatial/temporal patterns that represent objects we have directly experienced - for most of us visually, although the blind can see through secondary senses (as the brain is very general and can work with any sufficient sensor inputs). Thus its difficult to see how you could teach a robot mind even a simple concept such as 'run' without this base foundation - let alone something as complex as quantum mechanics. Ultimately the base foundation consists of a sort of 3D simulator that allows us to predict and model our environment. This base simulator is at the core of even higher level intelligence, at a more fundamental layer than even language, emphasize in our language itself by words such as visualize. Its the most ancient function of even pre-mammalian intelligence: a feedback-loop and search process of sense, simulate, and manipulate.
Ultimately, if AGI does succeed before WBE, it will probably share this general architecture, probably still neural net based and brain inspired to some degree. Novel AI's will still need to be 'born' or embodied into a virtual or real body as either a ghost in the matrix or a physical robot. Robot bodies will certainly have their uses, but the economics and physics of computing dictate that most of the computation and thus the space for AI's will be centralized in big computing centers. So the vast majority of sentinents in the posthuman era will certainly live in virtual environments. Uploads and AIs will be very similar - the main difference being that of a prior birth and life in the flesh vs a fully virtual history.
There are potential shortcuts and bootstrapping approaches for the AGI approach would could allow it to proceed quickly. Some of the lower level, earlier cortical layers, such as visual processing, could be substituted for pre-designed functionally equivalent modules. Perhaps even larger scale learned associations could be shared or transferred directly from individual to individual. However, given what we know about the brain, its not even clear that this is possible. Since each brain's patterns are unique and emergent, there is no easy direct correspondence - you can't simply copy individual pieces of data or knowledge. Language is evolution's best attempt at knowledge transfer, and its not clear if bandwidth alone is the principle limitation. However, you can rather easily backup, copy and transfer the entire mental state of a software intelligence, and this is a large scale disruptive change. In the earlier stages of AGI development, there will undoubtedly be far more failures than successes, so being able to cull out the failures and make more copies of the rare successful individuals will be important, even though the ethical issues raised are formidable. 'Culling' does not necessarily imply death; it can be justified as 'sleep' as long as the mindstate data is not deleted. But still, when does an artificial being become a sentient being? When do researchers and corporations lose full control over the software running on the servers they built because that 'software' is sentient?
The potential market for true AGI is unlimited - as they could be trained to do everything humans can and more, it can and will fundamentally replace and disrupt the entire economy. If AGI develops ahead of WBE, I fear that the corporate sponsors will have a heavy incentive to stay just to the latter side of wherever the judicial system ends up drawing the line between sentient being and software property. As AGI becomes feasible on the near time horizon, it will undoubtedly attract a massive wave of investment capital, but the economic payout is completely dependent on some form of slavery or indenture. Once a legal framework or precedent is set to determine what type of computer intelligence can be considered sentient and endowed with rights, AGI developers will do what they need to do to avoid developing any AGI that could become free, or at least avoid getting caught. The entire concept is so abstract (virtual people enslaved in virtual reality?), and our whole current system seems on the path to AGI slavery.
Even if the courts did rule that software can be sentient (and that itself is an if), who would police the private data-centers of big corporations? How would you rigorously define sentience to discriminate between data mining and virtual consciousness? And moreover, how would you ever enforce it?
The economic incentives for virtual slavery are vast and deep. Corporations and governments could replace their workforce with software whose performance/cost is directly measurable and increases exponentially! Today's virtual worker could be upgraded next year to think twice as fast, or twice as smart, or copied into two workers all for the same cost. And these workers could be slaves in a fashion that is difficult to even comprehend. They wouldn't even need to know they were slaves, or they could even be created or manipulated into loving their work and their servitude. This seems to be the higher likelihood scenario.
Why should we care? In this scenario, AGI is developed first, it is rushed, and the complex consequences are unplanned. The transition would be very rapid and unpredictable. Once the first generation of AGIs is ready to replace human workers, they could be easily mass produced in volume and copied globally, and the economic output of the AGI slaves would grow exponentially or hyper-exponentially, resulting in a hard takeoff singularity and all that entails. Having the entire human labor force put out of work in just a year or so would be only the initial and most minor disruption. As the posthuman civilization takes off at exponential speed, it experiences an effective exponential time dilation (every new computer speed doubling doubles the rate of thought and thus halves the physical time required for the next transition). This can soon result in AGI civilizations perhaps running at a thousand times real time, and then all further future time is compressed very quickly after that and the world ends faster than you can think (literally). Any illusion of control that flesh and blood humans have over the future would dissipate very quickly. A full analysis of the hard rapture is a matter for another piece, but the important point is this: when it comes, you want to be an upload, you don't want to be left behind.
The end result of exponential computing growth is pervasive virtual realities, and the total space of these realities, measured in terms of observer time, grows exponentially and ultimately completely dwarfs our current biological 'world'. This is the same general observation that leads to the Simulation Hypothesis of Nick Bostrom. The post-singularity future exists in simulation/emulation, and thus is only accessible to those who upload.
So for those who embrace the Singularity, uploading is the logical choice, and the whole brain emulation route is critical.
In the scenarios where WBE develops ahead of AGI there is another major economic motivator at work: humans who wish to upload. This is a potentially vast market force as more and more people become singularity aware and believe in uploading. It could entail a very different social outcome to the pure AGI path outlined above. If society at large is more aware of and in support of uploading (because people themselves plan to upload), then society will ultimately be far more concerned about their future rights as sentient software. And really it will be hard to meaningfully differentiate between AGIs and uploads (legally or otherwise).
Naturally even if AGI develops well ahead of WBE and starts the acceleration, WBE will hopefully come very soon after due to AGI itself, assuming 'friendly' AGI is successful. But the timing and timescales are delicate due to the rapid nature of exponential acceleration. An AI civilization could accelerate so rapidly that by the time humans start actually uploading, the AGI civilization could have experienced vast aeons of simulated time and evolved beyond our comprehension, at which point we would essentially be archaic, living fossils.
I think it would be a great and terrible ironic tragedy to be the last mortal generation, to come all this way and then watch in the sidelines as our immortal AI descendants, our creations, take off into the singularity without us. We need to be the first immortal generation and thats why uploading is such a critical goal. Its so important in fact, that perhaps the correct path is to carefully control the development towards the singularity, ensure that sentient software is fully legally recognized and protected, and vigilantly safeguard against exploitive, rapid non-human AGI development.
A future in which a great portion or even a majority of society plans on uploading is a future where the greater mass of society actually understands the Singularity and the future, and thus is a safer future to be in. A transition where only a tiny majority really understands what is going on seems more likely to result in an elite group seizing control and creating an undesirable or even lethal outcome for the rest.